New York Court gives Benihana’s fees a chop

Posted on February 23rd, 2017 by Legal Fee Advisors

By Emily Wilson.

Benihana, the cult Hibachi chain frequented by New Yorkers and others across the country, was embroiled in a licensing dispute in the Southern District Court of New York with the similarly named Benihana Tokyo (“BOT”), whereby Benihana sought an injunction to enforce the terms of a license agreement against BOT. With Benihana prevailing, it then sought attorney fees and costs in excess of $175,000. The Court identified several issues with the hours expended by Benihana’s counsel, namely extensive block billing and duplication of work. A Report and Recommendation issued by Magistrate Judge Ellis (“the Report”), recommended an across-the-board reduction of 60% to the fees, with the Court, however, deciding upon a lesser reduction keyed to specific timekeepers.

The act of block billing is that of combining multiple discreet tasks into one-time entry, alternatively, as put by the Court, “clustering the reported tasks into a single, disaggregated entry.” The Court noted that there were numerous days where one particular attorney block billed tasks for periods greater than five hours. This attorney also expended the most hours and charged the highest rate on the matter. A further issue that the Court found “disquieting” was the admission by the same attorney that he had estimated his hours (in good faith), with the Court finding it “inconceivable” that the majority of the attorney’s tasks were completed to a round number of hours. The Court held “[t]his degree of inexactitude and casualness about recording hours is a far cry from the expectations in this District.” It is because of this individual attorney’s “obfuscatory practice” the Court found it appropriate to apply a separate 45% reduction to the attorney’s hours.

Duplication was also another major factor in reducing the fee petition. Although the use of block billing made it difficult to “allocate the precise amount of time… devoted to each discrete task,” the Court held that “in the aggregate” there was a substantial amount of time devoted to researching general legal standards and reviewing the underlying license agreement. As mentioned in the Report, the Court found it excessive to review the underlying license agreement approximately thirteen times – in excess of 40 hours. The Report also noted that “routine and educational legal research is not to be subsidized through an award of attorneys’ fees.” The Court took further issue with the “significant number of conferences among multiple timekeepers on the case, without a clear explanation of need” provided within the billing records or declaration in support of the fee petition.

Conversely, the Court was critical of BOT for vigorously defending “certain brazenly prohibited practices” that required Benihana to submit written submissions of “length and significant detail.” The Court noted that Benihana’s work “reflected clear, effective, and proportionate advocacy” and that the fees would have been “materially less” had BOT’s defense not been as vigorous.

It was, however, the use of block billing and duplicative work that led the Court to make a reduction of approximately 33% to the fee petition, awarding $118,860.26 in fees and cost; demonstrating that exemplary advocacy by counsel can be marred by actions of individual attorneys. Attorneys should be aware of the impact their individual actions can have on litigation, with courts not afraid to single out attorneys and give fees the chop.

Benihana Inc. v. Benihana of Tokyo, LLC, No. 14 CIV. 792 (PAE), 2016 WL 3647638 (S.D.N.Y. June 29, 2016)

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